U.S. finance chiefs have been paring back cash balances and redeploying funds into higher-yielding securities, marking a sharp reversal from the pandemic era’s cash hoarding. Fresh data show the median corporate allocation to “cash”, a category that includes hard currency, money-market funds, and 90-day Treasury bills, fell to 20% at the end of July, down from 40% in 2021. The figures are drawn from about 800 U.S. corporate clients of Clearwater Analytics that collectively oversee $1.3 trillion in assets, and represent the lowest cash share in at least eight years, according to the firm’s tracking.
The breadth of the dataset matters: it aggregates portfolio choices across hundreds of treasuries teams rather than a handful of mega-cap outliers. As a result, it offers a timely read on how corporate America is responding to a still-restrictive rate backdrop and where treasurers believe the best risk-adjusted income sits on the front end of the U.S. yield curve.
Treasuries Gain as CFOs Lock in Yields
Where did the money go? Excluding very short-dated T-bills, median allocations to U.S. Treasuries have jumped from 3% to 20% over the same period. With yields still elevated by historical standards, CFOs are leaning into government bonds to lock in income while maintaining balance-sheet flexibility for working capital needs. The shift has been encouraged by a growing conviction that the Federal Reserve’s next move is likely to be a rate cut rather than a hike, a view reinforced by the July jobs report, prompting treasurers to secure today’s coupons before a potential drift lower. Many companies are also choosing to hold to maturity, underscoring a preference for predictable cash flows over trading gains.
That tilt toward slightly longer paper is visible beyond the Clearwater sample, too. Market data this spring showed corporate treasury desks stepping up purchases of one- to three-year notes to extend duration modestly while staying in low-risk instruments, additional evidence that balance sheets are being repositioned to harvest carry without venturing far out the curve.
Duration Creeps Up While Liquidity Still Matters
Even with the pivot into Treasuries, companies are not taking big interest-rate bets. Weighted by time to maturity, the median portfolio duration in the Clearwater universe climbed to 0.61 years by end-July from 0.45 years at the start of 2021, still squarely in short-duration territory. That stance lets treasurers capture higher coupons while limiting mark-to-market volatility and preserving the ability to reinvest relatively soon if the rate environment shifts.
It is also important to note what “cash” encompasses in the study: money-market funds and 90-day bills are already counted in the cash bucket. The decline in the cash share therefore does not signal a dash into illiquid assets; rather, it reflects a calibrated migration away from instruments that reset immediately as rates fall, toward securities that lock in today’s yields for a bit longer without sacrificing ready liquidity. Clearwater’s research head adds that the “higher for longer” regime has acted as a tailwind for cash-rich companies able to earn passive, low-risk income, even as it creates headwinds for borrowers.
What the Shift Means for Borrowers & Investors
For issuers that need to refinance or raise fresh debt, the persistence of higher benchmark yields continues to pressure interest expense and, in some cases, capital-spending plans. By contrast, firms with surplus liquidity are enjoying stronger interest income lines, using short Treasuries as a near-risk-free carry trade that lifts earnings quality. If the Fed begins to ease, money-market yields will likely be the first to decline, narrowing the spread versus short-dated notes and testing the appeal of this year’s duration extensions. That could gradually rotate some balances back toward at-call vehicles, but the overall posture, modest duration, high quality, ample liquidity, is likely to persist until there is clearer confirmation of the rate path.
For markets, the reallocation has added steady demand to the front end and the belly of the curve, helping anchor yields even as macro data ebbs and flows. For shareholders, leaner cash cushions can be a double-edged sword: they suggest more disciplined capital deployment and better yield capture today, but may limit dry powder for large buybacks or M&A if conditions tighten unexpectedly. The broader takeaway is that corporate America appears to be past “peak cash.” CFOs are replacing a portion of overnight balances with short-dated Treasuries that remain easy to monetize, a strategy built for a world where the next big policy move is expected to be downward, but where prudence on liquidity still rules.